The consumer consideration How some b-to-b catalogers sell to individuals as well as companies
Business-to-business catalogers selling everything from graphics arts supplies to golf club components have expanded their scope to include consumer customers. Selling to individuals can goose sales – but it’s not feasible for all b-to-bers.
Business catalogers considering targeting consumers must make sure the product line will appeal to individuals, says catalog consultant Katie Muldoon, president of Sugarloaf Key, FL-based Muldoon & Baer. “With b-to-b, you’re working within a niche,” she says. “You might be able to sell some items as gifts that friends could give the professionals you’re targeting, but you can’t just mass-mail to a bunch of consumers and expect them to buy.”
Because consumers and businesses alike use day planners and date books, East Texas, PA-based diary and planner cataloger Day-Timers has been able to successfully expand into business-to-consumer sales during the past 10 years. In fact, sales to consumers now make up almost half of the Fortune Brands division’s $150 million-plus in annual sales.
Although Day-Timers started as a b-to-b marketer, “we’ve traditionally targeted individuals,” notes vice president of marketing David Christensen. “As a result, we’ve been able to develop a nice b-to-b customer file consisting of both small businesses [at individuals’ homes] and corporate accounts. We use direct mail and outbound telemarketing lead generation.”
When developing prospecting models, Day-Timers looks for direct mail responders as well as behavioral attributes, such as people who attend professional or self-improvement business seminars. “We’re always going to prefer individual responder lists to compiled b-to-b lists,” Christensen says.
One catalog or two? Day-Timers sends its consumer customers catalogs with more high-end items and some gift diaries, while corporate accounts receive catalogs that sell lower-end diaries companies might buy in bulk for employees. Conversely, golf equipment cataloger GolfWorks mails the same catalogs to both consumers and pro shop professionals. “We offer price breaks to pros on components, but we also offer assembled products for consumers,” says Steve Gilligan, vice president of marketing for the Newark, OH-based mailer.
Although 80% of GolfWorks’ customers are consumers, the cataloger still focuses primarily on pro shop professionals, who account for 80% of its sales. “We started with all trade accounts of golf club builders,” Gilligan says. “But we have had more individuals as consumers since the mid-’80s.”
GolfWorks has no plans to change its current practice of mailing 1.2 million of its 1.5 million catalogs annually to consumers, although the average business account order is 30% higher than the average consumer order – and businesses place “considerably more” orders as well, Gilligan says.
Role reversal For some catalogers, market changes make it difficult to sustain their revenue and profits by selling solely to businesses. Cataloger/retailer Flax Art & Design is a case in point.
In the late ’80s, more than 70% of Flax’s catalog sales of design materials were to graphic design companies and other commercial accounts. But the advent of the Macintosh computer rendered many of Flax’s products obsolete, says director of marketing Craig Flax. So the company added crafts, novelties, and gifts to its merchandise line in order to appeal to consumers. The San Francisco-based company also rented the mailing lists of gifts catalogs.
Today, Flax mails the majority of its 10 million catalogs to consumers each year. Sales to freelance designers, ad agencies, and other businesses make up just 1%-2% of Flax’s revenue. “We made a 180-degree shift,” says Flax. “Now our repeat customers aren’t refilling paint supplies” but are buying more gifts instead.
Flax is again trying to broaden its reach – and ironically enough, it’s doing so by reaching out to more businesses. With some help from its Website, which sells some art supplies specifically for designers, the company is gathering names of graphic designers. Flax did a very small mailing of a business-related catalog selling art papers early last year. Now, having rented several b-to-b lists of graphic designers, the company hopes to mail another one later this year, Flax says.
Unwanted business Of course, not all b-to-b mailers are targeting consumers; in fact, some find consumers more hassle than they are worth. Cleaning products cataloger Stoner, for one, would prefer to retain its focus on automobile detailing professionals. Nonetheless, it receives an unspecified but, according to marketing manager Jeff Campbell, “substantial” number of orders from consumers.
“We can’t market to consumers profitably,” Campbell says. “We prefer to sell our products [car cleaning supplies that come packaged in cans] by the case. Consumers usually prefer to buy them by the individual can.”
And even when consumer customers do order the Quarryville, PA-based Stoner’s products by the caseload, the shipping is too expensive for the cataloger due to higher parcel delivery rates for consumer delivery vs. business, Campbell says. “It’s just not cost-effective for us, so we don’t do any serious follow-up marketing to consumers.”
If you’re pondering marketing direct to consumers with your b-to-b offering, here are some questions to consider first:
* Does your product line have potential consumer or gift-giving appeal? Can you develop products for consumers that are consistent with your main offering?
* Are there available mailing lists of consumers who would be interested in your product line?
* Would developing a b-to-c business hurt the integrity of your b-to-b offering?
* Do you have the necessary staff to embark on a b-to-c spin-off?
* Do you need to produce a separate consumer catalog, or could you get by with your regular b-to-b catalog?
* If you typically ship bulk corporate orders, are your operations set up to fulfill the individual orders of consumers?